PAK SEC issued notification of final amendments to Non-banking finance companies and notified entities regs, 2008, re expense regime reforms and Shariah compliance.
Total Expense Regime Reforms
Existing total expense ratio (TER) capping regime will be replaced with caps on management fees, effective Jul. 1, 2025; specified management fee caps by fund type.
Asset management companies (AMCs) as well as pension fund managers (PFMs) must provide detailed TER disclosures for mutual funds and pension funds per format; return after deducting TER to be disclosed to unitholders, as well as participants.
Shariah Compliance Enhancements
Introduced definition of Shariah compliant scheme in regulation 2; relaxation for obtaining Shariah compliance certificate for collective investment schemes (CIS) that share similar structure and strategy with the existing Shariah-compliant scheme.
All CIS lacking Shariah compliance certificate must obtain one by Sep. 30, 2025.
Annual Shariah advisor's report now required in financial statements distributed to unitholders and voluntary pension system (VPS) participants; Shariah-compliant schemes must clearly include words Islamic or Shariah-compliant in their name.
Trust deed for Shariah-compliant schemes must include Shariah governance framework details; AMCs must engage external Shariah auditor for Shariah-compliant schemes.
Financial statements must disclose Shariah non-compliant assets, liabilities, or income.
Other Requirements
AMCs to pay market development charges from remuneration for investor education, awareness, and market development activities; in addition, trustee must pay monthly fee to the PAK SEC at 0.005% per annum of the average net assets of schemes.
AMCs must disclose list of distributors on all digital platforms including website; cost related to PAK GVT levies on management fees excluded from reg caps calculation.
Effectiveness
Most amendments effective immediately as of Apr. 15, 2025; TER changes and management fee caps effective Jul. 1, 2025; and the requirement for obtaining Shariah compliance certificate for existing schemes has the deadline of Sep. 30, 2025.
